Cellular market closes second quarter of 2022 up 3.1%, according to IDC Brasil study
BN Americas - 21/09/2022

 In the second quarter of 2022, the cell phone market in Brazil recorded a rise of 3.1%, when 11.3 million devices were sold, about 345 thousand more than in the same period from the previous year. In terms of revenue, the months of April, May and June this year totaled around R$17 billion, 14.1% more than in the same period in 2021, and contributed to a total result for the semester of R$36, 7 billion, up 16.8% over the first six months of 2021. The data is part of the IDC Brazil Mobile Phone Tracker Q2/2022 study, by IDC Brasil, a leader in market intelligence, consulting services and conferences with the industries of Information Technology and Telecommunications.

The study also showed that, even in decline, the market for simpler devices with fewer resources still has breath. Of the 11,379,327 devices sold between April and June 2022, 10,873,792 were smartphones and 505,535 feature phones, 4% more and 12.9% less than in Q2 2021, respectively. “The sales volume of feature phones is much lower, but it continues to have space mainly outside large urban centers, serving an audience that uses the device more as a phone and not so much as a high-tech device or internet access”, explains Reinaldo. Sakis, Consumer Devices Research and Consulting Manager at IDC Brazil.

In the 2nd Q of 2022, an encouragement was the movement of the gray market, which fell by 47% compared to the same period last year, and 30% compared to the 1st of this year, as a result, among other reasons, of initiatives such as that of IDC Brasil that, together with Abinee, the National Council for Combating Piracy and Crimes Against Intellectual Property (CNCP) and manufacturers of the category, has shed light on the topic with studies and presentations aimed at combating the sale of products that have not the entire process of legal importation or local production in the country. “Despite the decline, the gray market is still large and remains an unfair competition for those who employ and pay taxes,” says Sakis.

Also in the second quarter, products in the price range between R$1,500 and R$1,799 were the most sold, representing 32% of the total smartphone sales volume. “It is in this range that you can find a large number of models, and the amount, in cash or in installments, still fits in the Brazilians pocket”, justifies Sakis.

The research manager at IDC Brasil also informs that in the second quarter of 2022, the average price of the devices was R$ 1,878, 11% lower than in the first quarter of the year, as a result of offering a mix with more products. low price, and 10% higher than in the second quarter of last year, a reflection of the increase in chips and their cost, more expensive freight and the devaluation of the real.

1st Quarter 2022 Results

According to the IDC Brazil Mobile Phone Tracker Q1/2022, in January, February and March 2022, 11,179,404 handsets were sold, of which 536,987 feature phones and 10,642,417 smartphones, down 5.8% from the first. quarter of 2021. The total volume includes gray market sales which, in the 1st quarter of 2022, fell by 10% compared to the same period of 2021.

Also according to the study by IDC Brasil, in the first quarter of the year, the average price was around R$ 1,725, a result 26.7% higher than in the first three months of 2021, reflecting the exchange rate variation and inflation that impact the cost components and is passed on in the final price to the consumer.

Finally, revenue for Q1 2022 was R$19.2 billion, 19.3% higher than in 2021, largely due to the increase in the average price of devices compared to the same period last year.

IDC Brazil Mobile Phone Annual 2021 Study

The Brazilian cell phone market ended 2021 with a drop of 6.1% compared to 2020. During the last year, 45.8 million devices were sold, of which 2.4 million were feature phones and 43.4 million were smartphones, a reduction of 8.3% and 6%, respectively, compared to 2020. The data are part of the IDC Brazil Mobile Phone Annual 2021 study.

“Last year was relatively stable. The second quarter was up 14%, but that was expected, given the poor performance of the same quarter of 2020,” says Sakis. According to him, the main change in the overall picture in 2021 was the departure of LG from the market, which opened the way for other manufacturers to compete for consumers of this brand.

As in 2020, the gray market also dropped, but remained active. Of the total units sold in 2021, 3.6 million devices were sold on the gray market. “It is a volume 9.5% lower than in 2020, but it impacts both the businesses of manufacturers and retailers that operate legally as well as tax collection and consumer safety”, says the manager of IDC Brazil. According to him, there are still unsuspecting consumers, who often buy the cell phone from a well-known site, but who deliver it is another company that brought the device from another country and did not pay the due taxes. “The price difference is unfair”, he adds.

In the official market, the average cell phone price in 2021 was around BRL 1,845 (up 19.51% compared to 2020), resulting in a revenue of BRL 66.3 billion, 9.5% higher than registered in the previous year. According to IDC Brasil, the increase in the average price was basically due to the increase in product resources, such as a larger screen, more memory and better resolution cameras, added to the pressure of global costs, such as the increase in freight from China, the surge in component prices and the depreciation of the real against the dollar.

In 2021, the consumer preference was for devices compatible with their budget. “The unstable economic scenario and high inflation and interest rates mainly impacted the low-income population, who opted for feature phones. Smartphones from R$1,000 to R$2,500, with more features and the possibility of paying in installments, formed the largest share of the market”, informs Sakis.

IDC Brasil projections for the cellular market in 2022

The first six months of 2022 were quite challenging for the mobile market. For IDC Brasil, the shutdown of factories in China, the war in Ukraine and the global economic instability affected not only the price of components but also their distribution. Given this, the countrys uncertainties and the challenges related to the domestic market, growth projections were reduced. “The lack of components had a major impact in the first half of 2022, but it should not be the protagonist of the movement for the rest of the year. What should affect sales is the commitment of consumer income, as a result of high inflation and interest rates, which will force IDC Brasil to revise, once again, the forecasts downwards”, predicts the research and IDC Brazil consultancy.

Not even the arrival of 5G in the country should significantly change this scenario. For the second half, IDC Brazil predicts an increase in sales of technology-enabled devices, but still timidly. “Brazilians always want to have their smartphones updated in their hands, but some short-term concerns such as elections, high interest rates and uncertainties regarding the economy should drive consumers away from stores in the second quarter”, concludes Sakis.

About IDC - International Data Corporation (IDC) is a leader in market intelligence, consulting and events services for the information technology, telecommunications and consumer technology markets. With more than 1,300 analysts worldwide, IDC provides global, regional and local insights into technology and industry trends and opportunities in 110 countries. IDCs analysis and expertise help IT professionals, executives, and the investment community make informed technology decisions and achieve key business objectives. Founded in 1964, IDC is a subsidiary of IDG, the worlds leading technology, research and events media company.